IFRS S2 requires you to use climate-related scenario analysis to assess your climate resilience, and to disclose how and when that analysis was carried out, including the inputs used and the key assumptions made. Read as a disclosure requirement that is unremarkable. Read as a documentation requirement it is demanding, because inputs and assumptions cannot be described accurately after the fact unless somebody wrote them down while the work was happening. This is what has to survive, and where it usually does not.
Key points
- IFRS S2 requires scenario analysis to assess climate resilience, using an approach commensurate with your circumstances.
- The standard asks you to disclose how and when the analysis was carried out, the inputs used, and the key assumptions made.
- That obligation is retrospective in practice: those things have to have been recorded while the work was happening.
- Climate resilience is assessed annually. The scenario analysis itself does not have to be redone annually.
- A simpler qualitative approach is permitted where exposure and capability are lower. It is not a lower standard of documentation.
What the standard actually asks for
The IFRS Foundation’s factsheet on climate resilience puts the requirement in two parts. A company must disclose information that lets investors understand the resilience of its strategy and business model to climate-related changes, and it must use climate-related scenario analysis to assess its climate resilience using an approach that is commensurate with its circumstances.
The disclosures themselves cover the implications for strategy and business model, the significant areas of uncertainty considered, and the capacity to adjust or adapt over the short, medium and long term.
Then comes the sentence that changes how the work has to be organised. A company also discloses how and when the scenario analysis was carried out, including information about the inputs used, the key assumptions made in the analysis, and the reporting period in which it was carried out.
Read that as a documentation requirement and it becomes much more demanding than it first appears. You cannot describe the inputs and assumptions of an analysis after the fact unless somebody wrote them down while it was happening. Most first-cycle scenario work happens in workshops, consultant decks and spreadsheets, none of which are treated as working papers at the time.
Proportionality is not informality
The application guidance is built on proportionality. The Foundation describes a three-step sequence: a company assesses its circumstances, determines an appropriate approach, then uses the results to assess its resilience.
Step one is an assessment of your exposure to climate-related risks and opportunities and the skills, capabilities and resources available to you, internal and external. Step two selects the inputs, including scenarios and variables, and prioritises analytical choices, qualitative or quantitative, so that you consider all reasonable and supportable information available without undue cost or effort. Step three interprets the results.
Where exposure is lower and capability is thinner, a simpler qualitative approach is expected. Where exposure is high and capability exists, quantitative modelling is. That is a sensible ladder, and it is widely read as permission to be informal at the bottom of it. It is not. A qualitative analysis still has inputs, still rests on assumptions, and still produces a conclusion someone accepted. The disclosure requirement does not soften for it.
In fact the proportionality mechanism creates its own documentation burden, because the choice of approach is itself a judgement. If you selected a qualitative approach, the reason is your assessment of exposure and capability at that time. That assessment is the thing an assurance provider will ask you to explain, and it changes as the business changes.
The annual question people get wrong
One point in the guidance is worth stating plainly because it is regularly misread in both directions. A company assesses its climate resilience annually. It is not required to update its scenario analysis annually. At a minimum, it updates the scenario analysis in line with its strategic planning cycle, and reassesses its circumstances each time.
So the annual obligation is the resilience assessment, not a fresh modelling exercise every year. That is a real relief for a smaller reporter. It also creates a trap: if the analysis you are relying on was carried out two years ago, the disclosure has to say when it was carried out, and you need the record from then. A reference to work nobody can now produce is worse than no reference.
What to retain, and where it usually goes missing
Splitting the record into what reaches the report and what stays behind it is the practical way to organise this. The report carries the implications, the uncertainties, the capacity to adapt, and the account of how and when the work was done. The file behind it has to carry the rest: which scenarios and variables were selected, why that approach suited your circumstances, the exposure and capability assessment that led there, the version of every dataset and model used, who reviewed the results, who accepted the conclusion, and when.
Three of those go missing more often than the others.
Version. Scenario datasets are revised. A conclusion drawn from one vintage of a scenario is not reproducible against a later one, and "we used the standard scenarios" is not a version.
The approach decision. Teams record the analysis and not the reasoning that led them to that kind of analysis. When exposure changes, nobody can explain why the old approach was appropriate at the time.
Acceptance. Scenario work is often produced by a consultant or a sustainability team and absorbed into the report without a recorded moment where a named person accepted the conclusion. The disclosure then rests on an assessment nobody formally owns. We have written separately about who signs off a climate figure, and the same gap appears here in a less obvious form.
What an assurance provider is likely to ask
Assurance over scenario analysis is not assurance that the future will resemble the scenario. It is assurance about process and faithful representation: that the analysis described is the analysis performed, that the inputs and assumptions disclosed are the ones used, and that the conclusion drawn is supported by what was done.
That means the questions are documentary. When was this carried out. What were the inputs. Which version. Who decided the approach. Where is the record that the results were reviewed. What changed since the last assessment, and how do you know. Our note on what auditors check in a first cycle covers the general shape of this; scenario analysis is the area where the answers are least likely to exist in writing.
None of that requires a modelling platform. It requires that the qualitative work you already did was recorded as it happened, with dates and names attached.
Where a controls system helps, and where it does not
Auditably holds the disclosure requirements of IFRS S2 as tracked items, attaches evidence to each one and hashes it on upload, records review and approval against named users, and writes every change to a log that cannot be edited afterwards. For scenario analysis that means the deck, the assumptions memo and the dataset reference sit against the resilience disclosure with a date and an approver, and the record of when the conclusion was accepted is not a recollection.
What it does not do is run scenario analysis, select scenarios, or advise on which approach is commensurate with your circumstances. Those are judgements, and they are yours or your adviser's. The boundary is set out in full on the coverage page, the price is on the pricing page, and the append-only claim behind the log can be tested directly without an account.
Common questions
Does IFRS S2 require specific scenarios?
The standard does not prescribe particular scenarios. It requires an approach commensurate with your circumstances, arrived at by assessing your exposure to climate-related risks and opportunities and the skills, capabilities and resources available to carry the analysis out. The choice, and the reason for it, are yours to make and to record.
Do I have to redo scenario analysis every year?
No. A company assesses its climate resilience annually, but is not required to update its scenario analysis annually. At a minimum it updates the analysis in line with its strategic planning cycle and reassesses its circumstances each time. If you rely on an earlier analysis, the disclosure must say when it was carried out.
Can a qualitative scenario analysis be enough?
Yes, where exposure is lower and the skills, capabilities and resources available are more limited. The guidance describes a simpler qualitative approach in those circumstances and more advanced quantitative modelling where exposure and capability are higher. A qualitative approach does not reduce what you have to disclose about inputs, assumptions and timing.
What has to be disclosed about the analysis itself?
How and when the scenario analysis was carried out, the inputs used, the key assumptions made, and the reporting period in which it was carried out, alongside the resilience assessment it informed.
Who should approve the resilience conclusion?
The standard does not name a role. In practice the assessment is a strategy judgement, so it usually sits with the same body that owns the governance disclosure. What matters for evidence is that the acceptance is recorded against a named person on a date, rather than implied by the report's publication.
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The requirement wording, the three-step sequence, the proportionality mechanism and the annual-assessment point are taken from the IFRS Foundation's March 2026 factsheet on climate resilience and climate-related scenario analysis requirements in IFRS S2. That factsheet states that it is not part of IFRS Standards and does not change the requirements in them; it is educational material, and we have used it as such rather than as a substitute for the Standard. The Standards themselves sit behind the Foundation's registration wall, which is why we cite the Foundation's public explanatory material rather than paraphrase the text from memory.
Product statements describe what the software does at the date of publication. We have no customers yet and therefore no case studies, usage figures or named references. This is a general summary and not advice on your own reporting obligations or on which scenarios suit your business.